Biggest Wealth Fund Forms New Real Estate Group

July 5 (Bloomberg) -- Norway’s $890 billion sovereign
wealth fund, the world’s biggest, is seeking top executives for
a new real estate group that will invest almost $10 billion
annually in properties over the next three years.

The fund, based in Oslo, is looking to hire new chief risk,
operating and administrative officers for real estate, according
to job postings on its website and in newspapers.

The new executives will have “key roles in implementing a
new organizational structure, and further develop our ability to
invest and manage real estate assets,” the fund said.

The group is currently overseen by real estate Chief
Investment Officer Karsten Kallevig, and part of the broader
risk structure of the fund, headed by Chief Executive Officer
Yngve Slyngstad. The fund first got approval to invest in
properties in 2010 and said last month it will invest 1 percent
of its assets in real estate over the next three years as it
seeks to reach its 5 percent target.

Thomas Sevang, a spokesman, said the real estate group will
remain part of the fund and not operated as a separate entity.
As part of an expansion of the group it’s natural to “staff up
on management,” he said by phone today.

In a strategy document released June 24 the fund revealed
it was boosting its staff by about 60 percent over the next
three years to tackle increased investments in real estate and
said it’s preparing for more investments in assets “with income
streams that grow in line with the global economy.”

Hiring Spree

The number of employees will grow to about 600 from 370,
mostly outside Norway, including 200 for real estate, the fund
said last month.

The investor owns 1.3 percent of the world’s stocks and is
struggling to meet a real return target of 4 percent. Central
bank Governor Oeystein Olsen, who oversees the fund, has argued
it needs to expand into new assets and raise the amount of
stocks it holds to 70 percent of its portfolio to raise returns.

The government of western Europe’s biggest oil producer has
set limits for the fund to hold 60 percent in stocks, 35 percent
in bonds and 5 percent in real estate. Since the establishment
of Norges Bank Investment Management in 1998, the fund has a
real annual return of 3.6 percent and a nominal return of 5.7
percent. Measured in dollars, it has generated a 6.7 percent
return.

It has so far bought real estate in places such as Times
Square, the Champs Elysees and London’s Regent Street. The fund
has a strategy to focus on 10 to 15 cities globally and its
efforts to enter Asia are about to intensify, Kallevig said in
an interview in May.

“There should be a significant increase in pace just based
on that,” he said.